The ink is dry on the largest private equity purchase of a US wine company in history, as Sycamore Partners buys the Washington-based outfit from US Tobacco.
The sale of Ste. Michelle Wine Estates has completed for a sum of US$1.2billion, announced the Bank of the West, who led the financing for the acquisition, today.
The closure makes the sale the largest private equity purchase of a US wine company in history.
Sold by US Tobacco, a subsidiary of Altria, Chateau Ste. Michelle is the biggest winery in the Pacific Northwest, and third-largest premium winery in the US.
With more than 12,140 hectares of vineyards, it produces 60% of Washington’s annual wine sales and has vineyards in the Columbia Valley of East Washington, including Canoe Ridge Estate and Cold Creek, producing expressions for brands including 14 Hands, Erath and Stags Leap. Ste. Michelle produces more than 8,000,000 cases of Riesling per year.
The tobacco giant oversaw a ‘strategic reset’ of the Ste. Michelle wine business last year, following surplus wine stocks and the writing off of some of its inventory.
It is thought that buyers Sycamore Partners, a private equity firm specialising in consumer, retail, and distribution investments, plan to work with the existing winery team, which includes head winemaker Bob Bertheau.
Speaking of the sale, David Dearie, CEO, Ste. Michelle Wine Estates said: “We are thrilled to partner with Sycamore in this exciting new chapter for our team, as we move forward as an independent, privately held company. With the benefit of Sycamore’s support and expertise, we will be well-positioned to continue to draw on our rich heritage to provide our customers with exceptional wines from the world’s premier regions and legendary wine producers.”
According to Paul Fossati, managing director Capital Markets, Sycamore Partners, The Bank of the West’s “holistic view of the ecosystem” of the wine world was critical to the sale.
“Private equity financing is becoming increasingly complex and nuanced, especially in today’s dynamic, global marketplace. This deal is no exception,” said Adam Beak, managing director, head of beverage vertical, Bank of the West. “Our comprehensive understanding of the wine marketplace – from go-to-market approach, to inventory management, to the unique financial structures – were instrumental in this milestone transaction.”
